Real Estate has always been the sought after choice for investment across the world. Real estate sector is one of the most globally recognized sectors. It comprises of four sub sectors – housing, retail, hospitality, and commercial.
It can offer multiple advantages and also citizenship in various countries when you invest in real estate in their respective countries. Some people presume investment in real estate requires huge sum of capital and opt for other alternatives like gold , stocks, mutual funds which doesn’t require much of an investment. Each and every investment has its pros and cons.
Investments like gold is open to people with all kinds of budget and can easily be liquidated but Real estate investments does require larger sum but at the same time long term higher benefits are involved in it. We find many people still hesitant towards investing in real estate but with proper research and good locality, a very investment opportunity is possible.
If you invest in bonds, stocks, or a tangible private offering, your success is majorly dependent on fluctuating Market risks. But on a brighter contrary, with real estate, you have unlimited options. If you find a property with features like affordable prices, nominal cost of property insurance and cheap property tax without any uncertainties , there is nothing wrong in going ahead with the option. As external factors cannot destroy or rob it, real estate is a good option for long-time investment.
REAL ESTATE INVESTMENT IN INDIA:
According to Indian Brand Equity Foundation, By 2040, real estate market will grow to Rs. 65,000 crore (US$ 9.30 billion) from Rs. 12,000 crore (US$ 1.72 billion) in 2019. Real estate sector in India is expected to reach a market size of US$ 1 trillion by 2030 from US$ 120 billion in 2017 and contribute 13% to the country’s GDP by 2025.
Retail, hospitality, and commercial real estate are also growing significantly, providing the much-needed infrastructure for India’s growing needs. Real estate attracted around Rs. 43,780 crore (US$ 6.26 billion) in investment in 2019.
Government of India along with the governments of respective States has taken several initiatives to encourage development in the sector. The Smart City Project, with a plan to build 100 smart cities, is a prime opportunity for real estate companies.
The growing flow of FDI in Indian real estate is encouraging increased transparency. Developers, in order to attract funding, have revamped their accounting and management systems to meet due diligence standards. Indian real estate is expected to attract a substantial amount of FDI in the next two years with US$ 8 billion capital infusion by FY22.
A COMPARATIVE ANALYSIS:
1. According to the Union ministry for finance, across 51 banks in India, robbery, theft, and burglary of bank lockers accounted for 1.80 billion rupees loss. Also, the Reserve Bank of India has stated that: “Banks are not liable for the thefts of valuables in lockers”. Security is one of the main reasons why investing in gold becomes less profitable. This is not the case with real estate properties.
2. Investing in startups is also a risky option, as research shows that 90% of startups fail. If money multiplication is your goal, then investment in startups is not your best bet. Real estate investment for entrepreneurs is the answer.
3. Tax deduction makes real estate a great investment option. The rental repairs, utilities, maintenance, cost of legal services, mortgage tax deductions, etc are considered at the time of taxation.
4. The highest advantage of investing in Gold is that the investments are flexible. You’ll purchase 1 gram, 5 grams, 10 grams, or any amount of Gold depending upon the quantity of cash you’ve got to take a position. The gold investment can start from a couple of thousand of rupees to lakhs and crores.
5. The Indian government has already put up a draft new Rental Law which will ensure a safe and secure renting experience for investors. This move has helped not only capital appreciation of the asset but also safe rental income.
6. In the POST-COVID-19 scenario, with international investors looking to shift their investment from China to India, it is all the more advantageous for real estate investors in India. There will be more jobs & mass migration to urban cities, which will result in increasing prices of real estate.
7. the fear of illegal occupation or unauthorized persons selling your property in a fraudulent manner is always prevalent. In the present times, with robust registration processes backed by video records, biometrics, and modern documents like Aadhar card, etc., it is impossible for fraudsters to illegally occupy or sell your properties.
8. The rental yield from commercial real estate has been better than residential real estate. “In the residential sector, the rental yield turns out to be 2-3% odd after paying maintenance and property tax, whereas in commercial real estate, investors get a net yield of 7-8%,” said Raja Seetharaman, co-founder, Propstack, a commercial real estate research firm.
9. Gold-backed mutual funds closely track the value of gold. These are open-ended funds and can be redeemed at any point. However, if you don’t mind a loss of liquidity and can lock the money for five years, Government of India’s gold bonds are issued periodically and are sold by banks. Their value increases in step with gold, plus there’s an extra interest of 2.5% per year.
10. It has been tested time and again that gold provides a strong shield against inflation. Gold rates remain almost unaffected at the time of inflation and therefore, you do not have to suffer a loss when the inflation hits and even the currency rates go down in the global market.
I would like to conclude that in this modern age, Real Estate investment actually prove to be a successful long term investments. Real estate has been right at the top of Indians’ investment list, although the past couple of years have seen things change.
Factors like: demonetization, implementation of RERA and GST as also amendments to the Benami Properties Act and Insolvency laws have changed the way real estate functions; it is now a transparent, safe and secure investment option.